May 15 (Reuters) – J.C. Penney Co Inc’s return to
“old school” retailing paid off for the second consecutive
quarter, sending the company’s shares up more than 25 percent in
after-hours trading.

Penney, whose attempt to go up-market resulted in a 25
percent drop in sales in 2012, has revamped its household goods
section and brought back many of the no-frills clothes that were
ditched in its failed drive to attract more affluent shoppers.

Comparable store sales rose 6.2 percent in the first quarter
ended May 3, helped by demand for household goods, men’s and
women’s clothing, and jewelry, the company reported on Thursday.

It was the second consecutive quarter of same-store sales
growth, after nine straight quarters of decline.

“We expect to carry this momentum into the second
quarter…”, said interim Chief Executive Mike Ullman, who
returned to the helm last April after the ousting of Ron
Johnson, the former Apple retail head who had led the
retailer’s failed re-imaging strategy.

Gross margins also continued to improve, to 33.1 percent
from 30.8 percent in the same quarter of 2013, and Ullman said
significant improvement was expected for the rest of the year.

“The return to old-school department store retailing
principles … with an infusion of flare in key departments is a
recipe that could bring the company to the land of profits for
the upcoming holiday season,” Brian Sozzi, chief executive of
Belus Capital Advisors, said in a research note.

The company’s net loss of $352 million, or $1.15 per share,
compared with a loss of $348 million, or $1.58 per share, a year
earlier. Excluding items, the loss was $1.14 per share,
according to calculations by Thomson Reuters I/B/E/S.

Analysts on average had expected a loss of $1.24 per share.

Total sales rose to $2.80 billion from $2.64 billion,
beating the average estimate of $2.71 billion.